Goldman's Cohn urges China to convey policies more clearly
Goldman Sachs Group Inc. President Gary Cohn said he hopes that China will improve its communication of economic policies as financial markets try to discern what tools the nation has to stem its slowdown.
"We've all been telling the Chinese that more communication, clearer communication would be helpful for the market," Cohn, 55, said Friday in an interview in Shanghai, where Group of 20 finance officials are meeting. "Hopefully, the Chinese are trying to more clearly communicate what their initiatives are going to be." China is at the center of questions about where global growth is going to come from, Cohn said, hours after a spate of communication from the nation's policy makers that sent Asian stocks higher. People's Bank of China Governor Zhou Xiaochuan said there is scope for further actions to address downside risks to the world's secondlargest economy, while the central bank published a statement defining its policy as "prudent with a slight easing bias."
China, which has kept benchmark interest rates at record lows since October, has been injecting liquidity and guiding market rates lower as it shifts to a market-based monetary framework. China's economy grew 6.9 percent last year, the weakest since 1990, as officials try to reduce its dependence on exports and manufacturing and spur domestic consumption.
Cohn said the world is trying to figure out how successful China has been in making the transition to a consumer-driven economy. "At what rate are they consuming and what economic growth is that creating? That is a big mystery to the markets right now," he said. Cohn said he will "temper expectations that something really major" will emerge from the two-day G-20 meeting of finance ministers and central bankers. He said central banks should take a more global approach to monetary policy, with the U.S. and China among the few countries that have allowed their currencies to remain relatively strong. The past five to seven years of low interest rates have done little to fuel growth and inflation, raising questions about how effective monetary policy has been, Cohn said. Countries have been lowering rates to weaken their currencies and expand their economy at the expense of others, he added. "We got global problems with growth, we can't fix this with local monetary policy," Cohn said. "We have to talk about monetary policy more globally today than we ever have."
Asia's oil markets are being upended as India's and China's refiners overtake oncedominant buyers like Japan and challenge the United States as the world's biggest consumer. The shifts are not only establishing new trade routes but are also challenging the way oil is priced in the region as the new players push for more cash cargoes and fewer long-term deals.
China and India's combined share of world oil consumption has tripled since 1990 to over 16 percent, nearing the U.S. share of roughly 20 percent, cementing their status as the main center of global demand growth.
"Asian oil markets are in a tremendous period of flux," said Owain Johnson, managing director of Dubai Mercantile Exchange (DME). By 2040, China and India could double their share again to a third, analysts say.
One of Asia's rising traders is Indian Oil Corp <IOC.NS>, which operates 11 refineries with a combined capacity of 80.7 million tonnes a year (1.9 million barrels per day), a third of India's capacity and roughly the same size as Exxon's <XOM> U.S. refining base.
"Spot crude (trading) gives more flexibility and more variety is available. Last year we raised spot purchases and for this year we are working out a strategy," said its head of finance A. K. Sharma.
The changes come at the expense of western majors, with Shell <RDSa.L> complaining in December that aggressive trading, conducted by Chinese companies, meant Asian crude prices didn't properly reflect the market.